Enterprise Resource Planning (ERP) is usually seen as something reserved for global entities and the so-called big dogs. Yet, you may be surprised to learn that even small and medium sized businesses (SMBs) can take their organizations to the next level with the right system in place. Discover the benefits, usage, and best resource planning platforms for any-sized organization. And see how a small business can grow to become one of the tops in their industry with an ERP system in place.
Every company starts somewhere. Microsoft began in a garage. Facebook, a college dorm room. The next unicorn or even major cultural shift brought on by human innovation can be hiding in plain sight right now. Or maybe it’s your own organization.
For many, the difference between a set-up in their garage and reaching the big leagues is the systems and workflows that they implement early on. The best way to do this is enacting a plan for scaling. Including developing sustainable business models and using every resource available.
The key to both of those: putting resource planning practices into place as soon as possible.
What is Enterprise Resource Planning?
Resource planning is essentially delegating and distributing tasks to your resources in order to complete your projects. These resources can be anything you plan with – a contractor, a vehicle, meeting room #24, a rented tractor.
No matter if you prefer the term ‘resource scheduling’ or ‘resource management’, the idea is to keep track of who is doing what and when.
Yet because of the popularity of enterprise resource planning systems, there’s often a misconception that the practice is reserved for big organizations. And an ERP platform isn’t something that a small business should bother with. But the reality is that companies of all sizes can stand to benefit from the planning and management of resources.
So while it’s imperative that a large organization have a resource planning strategy in place, it’s also crucial for small businesses to implement an affective ERP system they can use today.
Why Should Small Businesses Use a ERP System?
There’s plenty of reasons why small businesses should use an ERP system.
- Cloud-based ERP systems brings together different business functions like finance, inventory management, human resources, and sales into one platform. This integration helps eliminate data silos and ensures accurate information for informed decision-making.
- ERP platforms can also automate tasks and improves business processes. This helps in making operations more efficient and productive. Plus this can reduce costly human errors and save time by eliminating redundant data entry.
- Enterprise resource planning provides better visibility and control over business operations. It offers useful reporting and analytics tools to monitor performance and identify areas for improvement. This enhances collaboration between departments, and improves customer satisfaction by enabling faster responses.
- Resource planning practices and an ERP system supports business growth by keeping your organization flexible and adaptable. Something which ultimately helps businesses expand into new markets. And also the reason why more often than not, resource allocation plays a big part in multi-project planning. That’s why you see conglomerates like General Electric, Hitachi, Samsung and Procter & Gamble carry out resource management on a daily basis. Which means if you’re managing more than one project at a time, enterprise resource planning will help you get all projects delivered!
Benefits of Enterprise Resource Planning
At the end of the day, resource planning prevents project failure. When you’re working with hundreds or even thousands of employees, you need an easy way to monitor the on-going work. Managers must have a way to quickly be able to see and keep track of how many employees are working on a project, which employees are free, when to allocate new projects to employees and more.
Here’s a few more benefits that organizations of any size will see once they get the proper ERP system in place:
- Everyone is on the same page
- Increased transparency
- Improved communication between departments and locations
- Single source of information
- Helps you stick to project timelines
- Decreases project risks and additional expenditures
What Kinds of Businesses Use ERP?
ERP software is utilized by a wide range of large, medium, and small businesses across various industries. The tool is not limited to specific sectors, as it is applicable to businesses with diverse operational needs. SMBs from sectors such as manufacturing, creative studios, engineering, distribution, services, healthcare, construction, and hospitality commonly employ ERP systems.
Check out a few of Ganttic’s case studies on how our clients employ resource planning across all types of industries!
Do Small Companies Need Resource Management Too?
The short answer is yes. As resource management comes in many different forms, from using simple scheduling software to mentally scheduling work for staff, every small company manager is already engaging in this practice whether they know it or not.
That’s because no matter the size of your company, various human resource issues need to be worked through on a daily basis. How much staff does the business need to run smoothly in day-to-day operations? Just how many resources can the business afford? And how does one effectively evaluate employee performance? And more.
Even with a handful of employees, it’s crucial to utilize resource planning for a sustainable future. And ERPs can provide a lot of benefits, even for a small and medium sized business.
Read on: Check out a few of our recommendations for free business tools for startups.
How Do SMBs Benefit from ERP?
Here’s a few more specific benefits for SMBs that come from utilizing a proper ERP system:
Use Resources in a Smarter Way
“You gotta spend money to make money.” Well for SMBs, sometimes there isn’t a lot of money to spend!
But with resource planning you can make schedules that utilize your people and equipment in smarter ways. You’ll see where there’s gaps in the schedule, and fill them with the appropriate resources. Things will run more efficiently, and instead of hiring an additional contractor or renting another bulldozer you’ll discover that everything you had was already on hand.
Keep Projects Within Budget
“The bigger they are, the harder they fall.” But they don’t have to!
Statistics demonstrate that small projects, (those with a budget of less than a million dollars) have a 76% success rate. Compare this to the 10% success rate of large projects with a budget of more than ten million dollars. Likewise, large projects have a 38% failed rate as opposed to the 4% failed rate in small projects.
With these kind of statistics, it’s no wonder why larger companies are drawn to ERPs. Which can provide real-time visibility into project costs and expenses. Giving a comprehensive view of the financial health of the business. An enabling businesses to make informed decisions regarding project investments, resource allocation, and cost-saving measures.
But no matter your size or budget, no project needs to fail with an ERP in place. That’s because in addition to monitoring project-related expenses, including labor costs, materials, and other expenditures, such software helps with accurate forecasting and budget planning. By analyzing historical data and project trends, the ERP system can generate reliable forecasts and estimates for future projects. Enabling SMBs to set realistic budgets and allocate resources accordingly, minimizing the risk of cost overruns.
Counteract Everyday Business Challenges
Between failure and success there’s also the projects that were challenged along the way. From the same infographic above, we can see that more than half of larger projects and almost a quarter of smaller projects met with challenges.
What are these challenges? According to the Pulse of the Professional challenges can manifest as anything from communication issues, to poor resource planning, or inaccurate forecasting. All of which can be fixed from implementing an organization-wide resource planning system.
Sometimes a schedule is just who’s available at the moment. But there’s other ways to think about it too. A schedule should reflect the right people and tools for the right job, and resource planning helps with that. Create schedules based not only on people’s availability, but skillsets or certifications.
For equipment, think about other special requirements, types, or even weight classes. As well as the people running said machinery. In the end you’ll develop a schedule that truly reflects your workforce and one where there’s no double-bookings or over-utilization. Meaning your team will be happier, retention will be higher, and more work can get done.
Deliver Projects on Time
Project scheduling without resource planning is only half of the picture. Because just knowing the timeline isn’t enough. And it’s resources that make projects happen. ERP helps small businesses create project schedules with less conflicts between resource demands and project demands. That helps you keep to your promised timeline and makes clients happier.
Grow More Sustainably
Where do you want to be in the next 10 years? Hopefully still thriving and doing better than ever.
For that to come to fruition, sustainable practices need to be put into place, like now! With ERP you can track your resourcing budgets and see what you’re actually paying to get the work done. Use it to compare plans to reality and see where cuts can plausibly be made. All this helps you grow at a healthier pace, and set the wheels in motion for a more sustainable future.
Cons of Enterprise Resource Planning
Yet for every positive aspect of an ERP, there’s downsides as well. And especially for small business, expect to see the following cons of ERP.
- Difficulty for all employees to use – ERPs are notoriously complicated and the learning curve is something that many SMBs don’t have the time and resources to learn and master.
- Lengthy migration process – time is money, and the length of time needed to implement your ERP software can be more than some are willing to invest.
- Not every system integrates with other work tools – It’s unlikely that you’ll be using just one tool in your daily business operations. And unless your ERP comes with an API, it can be hard to keep all your info organized and in one place.
- High costs – Want your whole team to stay connected to the resource planning? Then expect to pay. How much exactly?
How Much Does ERP Cost?
Not to scare anyone away from implementing an ERP, but they don’t come cheap! Average annual project costs per user are about $8,265. And implementation costs anywhere from $150,000 and $750,000 for a mid-sized business. This is something that maybe a larger organization can swing, but for a SMB this figure is definitely hard to swallow. So what’s the solution for a small business interested in ERP?
“Lite” and Affordable Resource Planning
ERP is a great solution for large and small businesses alike. Yet, with the high costs, it can be difficult to take the plunge into implementing a brand new system. But for managers looking to dip their feet into the resource planning pool, then going with a lite-ERP solution like Ganttic is a good starting point.
Ganttic has many of the same features of on-premises ERP, but without the costs, difficulty, or lengthy setups. A cloud-based resource management system with unlimited users, you can effectively create schedules, track projects and resources, and share it with the team. The open API means Ganttic can fit in alongside all your other favorite work tools with skipping a beat. Plus, extensive security protocols and project management features means the tool can grow alongside your company at a competitive price. Without holding you back.